Japan’s August PPI: Monthly Decline Contrasts With Strong Annual Inflation, Bolstering BoJ Hike Prospects
| Pair | Now | Since publish |
|---|---|---|
| USDJPY | — | — |
| EURJPY | — | — |
| GBPJPY | — | — |
| AUDJPY | — | — |
- Japan August PPI down 0.2% m/m but up 7.6% y/y.
- Annual PPI beat forecasts, supporting BoJ rate hikes.
- Import prices surged 24.8% y/y, signaling continued JPY weakness.
Japan’s producer prices in August registered a 0.2% month-on-month decline, missing expectations for a flat reading, following a revised 0.4% increase in July. However, on a yearly basis, the Producer Price Index (PPI) advanced 7.6%, exceeding the anticipated 7.4% rise and remaining near July’s revised 7.7% annual growth. This sustained high wholesale inflation reinforces the case for the Bank of Japan to continue raising interest rates to counter persistent price pressures. While markets have largely priced in a hike to 1.25% at the upcoming meeting, the 24.8% year-on-year surge in the import price index highlights continued yen weakness contributing to domestic cost inflation, potentially leading to earlier and further rate increases, with some analysts now forecasting 1.75% by Q2 2027.